There was a tendency to assume, said the chairman, Iain Vallance, that BT could continue to produce consistent rates of dividend growth in a deterministic fashion. In the real world of the market place, by contrast, there were uncertainties.
Regulatory pressure from Oftel would have an unpredictable impact on BT's revenues and market share. Lower than expected inflation meant that BT's RPI minus 7.5 per cent price cap pinched even tighter, but it also improved real returns to shareholders.
Since 1984, when it was first privatised, BT's shares have yielded 4.5 per cent on average, allowing for inflation. An interim dividend increase of 8.1 per cent, when inflation is running at less than 2 per cent looks generous.
The sharp recovery in call volumes in the second quarter cannot offset the new price cap, and costs are barely following revenues down, implying pretty static earnings.
So dividend increases may slow in nominal terms to 6.5-7 per cent. This is likely to be less than the market average but at worst could dampen the BT share price. A total dividend of 16.5-17p implies a prospective yield of 4.4 per cent, which is still a 20 per cent premium to the market average, and attractive to seekers after income.